Essays on Employee Relations in Malaysia Case Study

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The paper 'Employee Relations in Malaysia" is a good example of a business case study.   The traditional Industrial Relations system is continually being phased out and organisations are increasingly taking up a contemporary Employment Relations approach in managing employee relations. Modern companies have embraced distinct strategies of dealing with employee needs; such that there is an insignificant need for trade unions as witnessed in the Industrial Relations system. There are various forces leading to the diminishing popularity of industrial relations in Malaysia. These include the rise of globalisation, competition, rising unemployment and government policy among other factors.

Notably, a combination of these factors has led to a significant decline in union membership. It is especially evident that Malaysia’ s legal and institutional environment is not favourable for strong unionism. An exception of the banking sector is noted, where the National Union of Bank Employees (NUBE) has a 90 percent membership capacity. This paper seeks to establish that contemporary Employment Relations are consistently replacing the Industrial Relations system; with a specific focus on Malaysia.   Industrial relations in Malaysia The State has significant control over trade unions in Malaysia.

Since the British colonial times, a precedent for the direct intervention of the state in industrial relations was set and this has continued to the present day. Union size is significantly regulated and the Director-General of Trade Unions has the authority to refuse the registration of a new union (Ayyadurai, 1990). Further, the Minister has the power to suspend unions (Barnard, 1992). This to a large extent explains why the Industrial Relations system is being phased out rapidly within the country. Furthermore, the ILO Convention 87 which allows freedom of association has not been ratified in Malaysia; a factor that has played a great role in discouraging union development (Peetz & Todd, 2000).

In Malaysia, more companies constantly oppose unionism and the government has done little to challenge such opposition. Additionally, the number of items which unions may include in their objectives as provided in the Industrial Relations Act is highly restricted. Unions deal with overtime, leave and holidays and are not allowed to include managerial items such as hiring, firing, promotion, redundancy, transfer and allocation of duties (Ramasamy, 2006). The decline in Industrial Relations and the rise of contemporary Employment Relations The prevalence of the Industrial Relations system in Malaysia can be said to have decreased significantly.

There is an indication that union membership in Malaysia has declined significantly over the years. According to Kuruvilla (1995), the record in 1990 was 9.35 percent, 9.24 percent in 1995, 7.87 in 2000, 7.84 in 20004 and 7.8 in 2006. This has been attributed to the reducing legal support for trade unions in the country such that there is little motivation for the same (Said, Zakaria & Said, 2002).

A shift in industrial relations policies was witnessed in the country reflected common strategic interests between the government and foreign investors. Evidently, the Malaysian government needed to preserve a competitive advantage in terms of cheap, disciplined labour in order to attract foreign investment (Ramasamy, 2006). This lead to an increased involvement of the state in industrial relations thus culminating in what was referred to as repression, as opposed to controlled pluralism that was witnessed when unions were first introduced (Kuruvilla, 1995; Arudsothy & Littler, 1993).

The government adamantly refused to grant the trade unions’ demands to enact minimum wage legislation. Accordingly, the unions only represented workers on issues of overtime, leave and holidays. Cost-cutting by the government further led to changes in wage calculation so as to reduce costs through overtime costs. The hourly pay for working on rest days was thereby reduced to two times as opposed to the previous three. Additionally, workers going to work during holidays would be paid 3.5 times hourly pay as opposed to the previous 5.5 (Kuruvilla, 1995).

Another major blow on labour unions in Malaysia was the government’ s decision to exempt some of the foreign companies from labour laws. The first case was in 1981 when INTEL Corporation was allowed to work its employees for sixteen hours continuously (Kuruvilla, 1995). This was followed by an amendment of the Employment Act that gave directors a right to work employees for more hours as long as they did not exceed 48 hours per week, which gave employers more flexibility. Increased involvement in labour union activities in Malaysia has thus led to a reduced need for labour unions and consequently led to the development of contemporary Employee Relations.


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